Question 1

Can I use home equity to buy a second property?

Accepted Answer

Equity is the value of your home, less any money owed on it. For example, if your house is valued at $800,000 and the current debt is $200,000, the equity in the home would be $600,000.

You can leverage the equity in your home to cover the deposit on a new property, using your existing property as collateral. It’s great to make the first step to enter the property market because once you’re in, using equity is generally much easier than saving for another deposit.

Question 2

What are the benefits of owning an investment property?

Accepted Answer

Buying an investment property is a popular choice of investment for many New Zealanders. Compared to other forms of investment like shares and bonds - investing in property is easy to understand. House prices are low and you can use your home's equity to fund your property investment.

Some benefits of purchasing an investment property include:

Potential tax benefits

Potential capital growth

Relatively stable investment

Passive income

Question 3

How much deposit do you need for an investment property?

Accepted Answer

New Build homes are exempt from the Reserve Banks standard Loan to Value Ratio (LVR) of 30%. You may be able to secure a New Build Investment Property with as little as a 10% deposit. Alternatively, you might be able to use the equity in your existing home as security, so there may be no deposit required at all. Please discuss your options with your finacial advsier, bank or mortgage broker.

Question 4

What locations should I look for when investing in property?

Accepted Answer

Location is important in property investment. Consider the type of renter you want and the best location to attract them. You should consider how close it is to public transport and major roads, access to cafes and other amenities, school areas, parks, beaches, crime rates, developments, and the local appeal of the area.

Question 5

How do I determine the right rental price?

Accepted Answer

When setting a rental rate, it is important to be competitive in order to attract high-quality tenants.

Get a rental appraisal from your local property manager to figure out the suitable rent. They know how much similar properties rent for and what you can do to either improve value or appeal to a higher-paying tenant.

Examine the area's median rental pricing and the property's features and type. Know the area's rental demand and consider your expenses. Remember that rentals fluctuate from year to year, so schedule an annual rental appraisal with your property manager to ensure your property is working hard for you.

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